14 Oct 2022

Last night, U.S. stocks opened lower and moved higher. As of the close, the S&P rose 2.6%, the Nasdaq rose 2.2%, and the Dow rose 2.8%. The yield on the 10-year U.S. Treasury bond rose 5 basis points to close at 3.948%, which was -51 basis points compared with the yield difference of the two-year Treasury bond, and the inversion rate further increased. Fear index VIX fell 4.86%. Crude oil prices turned higher, with Brent crude up nearly 2.5% to close at 94.65. Spot gold fell 0.42% to $1,666.14 an ounce. The dollar index fell 0.7% to close at 112.45.

The U.S. unseasonably adjusted CPI in September recorded an annual rate of 8.2%, expected 8.10%, and the previous value of 8.30%. The annual rate of core CPI was 6.6%, expected to be 6.50%, and the previous value of 6.30%. Both data exceeded market expectations. Looking at the core CPI, which is more concerned by the market, new cars and used cars increased by 9.4% and 7.2% year-on-year respectively, and transportation services were 14.6%. Rent still increased by 0.8% month-on-month, and the previous value was 0.7%, which did not appear to fall as generally expected by the market. After the data was released, the stock index plunged in a straight line, and the Nasdaq futures fell by 3% at one point. Market sources said that U.S. short-term interest rate traders expect the Fed’s policy rate to reach a range of 4.75%-5% in March 2023.

Housing and an index tracking the cost of food and health care were the biggest contributors to the rise in the CPI, the Bureau of Labor Statistics said. Within the housing category, the index tracking rents for primary residences and the index tracking equivalent rents for homeowners both rose 0.8% from the previous month, the report showed. The increase in landlord-equivalent rent was the largest since June 1990.

However, after the opening bell, U.S. stocks fluctuated higher and turned higher one after another, mainly because the market has fully priced the Fed's tightening expectations. From the dot plot, the expected end-point interest rate of 4.5% has not changed much. In the end, all three major indexes closed up more than 2%.

The majority of railroad workers, represented by the National Association of Firefighters and Oilers, voted to accept a labor deal brokered in part by U.S. President Joe Biden last month, with 58.7 percent of voters in favor. Five unions had previously agreed to accept the deal. In a statement, NFCO President Dean DeVita said that despite accepting the labor agreement, many NCFO members were "disappointed with the terms", with sick leave and leave policies being important issues. Five other unions reportedly plan to close the ballot in mid-November, after one union rejected the tentative deal.

Apple rose 3.36%. Although the iPhone 14 and 14 Plus broke sales and the sales were not satisfactory, the more expensive iPhone 14 Pro/Pro Max was extremely popular, and it is still in short supply. A few days ago, investment bank JPMorgan Chase predicted in a research report that Apple's fourth-quarter revenue is expected to be around $90 billion, setting a new record.

Tesla rose 2.06%. According to foreign media reports, Tesla has a clear advantage in the U.S. electric vehicle market. According to data from relevant agencies, their new registrations in the U.S. market this year have exceeded 300,000.

Amazon fell 0.33% after a two-day Amazon Prime shopping event that began on Tuesday, much like the Prime Day summer marketing blitz, will compete with other retailers' early discounts.

Microsoft rose 3.76% after Microsoft and Mercedes-Benz announced that they would form a partnership to use the Microsoft cloud platform to improve the production efficiency of more than 30 auto factories around the world.

Sources from: Investing.com; Reuters.com

Louis Yap

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